D.K. TRIVEDI AND SONS AND ORS. ETC. ETC. v. STATE OF GUJARAT AND ORS. ETC. ETC.

A J,, matter. It will suffice if we state broadly how these Writ Petitions and Appeals have come to be filed. The parties before us, other than the State of Gujarat and governmental authorities, are persons to whom the State of Gujarat has granted quarry leases and mining leases in respect of minor minerals such as black trap, limestone, unrrum, bentonite, B rubble, marble, sandstone, quartzite, etc. In exercise of the powers conferred ·by section 15 of the Mines and Minerals ' (Regulation and Development) Act, 1957, the Government of Gujarat made the Gujarat Minor Mineral Rules, 1966. The said Rules came into force on April 1, 1966. All the leases in the matters before ·us were l!iven in the form prescribed by the said Rules. Schedule I to the said Rules specified the rates c at which royalty was payable and Schedule II specified the rates at which dead rent was.payable. By the 1974 Notification the Government of Gujarat made the Gujarat Minor Mineral (Fourth Amendment) Rules, 1974, whereby Schedule. I was substi- tuted and Schedule 11 was amended with effect from December l,

1974. Under the new Schedule I and the amended Schedule II the D rates of royalty and dead rent in respect of certain minor minerals were enhanced. In view of several representations made to it, the Government of Guj~rat decided not to implement the 1974 Notification and to refund the amount of royalty, if any, collected at the rates prescribed by the 1974 Notification. By the 1975 Notification the Government of E Gujarat made the Gujarat Minor Mineral (Second Amendment) Rules, 1975, whereby Rule 21 of the said Rules and Schedule I were substituted with effect from November 1, 1975. By the said substituted Schedule I the rates of royalty in respect of ~ several items were enhanced. F We may pause here to mention that the Appellant in Civil Appeal No. 706 of 1981, Ambalal Manibhai Patel, filed a writ petition in the Gujarat High Court, being Special Civil Appli- cation No. 66 of 1978, chalienging the enhancement in the rate of royalty to Rs. 3 per metric tonne in respect of black trap and hard murrum specified in Item No. 4 of the said substitu- G ,,f ted Schedule I. The said writ petition was rejected by a · learned Single Judge of that High Court. The Letters Patent Appeal against the order of the learned Single Judge, being Letters Patent Appeal No. 61 of 1978, was heard along with several writ petitions raising the same questions. The main contention raised in those matt~rs was that under the proviso H

502 SUPREME COURT REPORTS [1986 J l s.c.R.

A to section 15(3) of the 1957 Act, the rate of royalty in \. respect of any minor mineral could not be enhanced by the State Government more than once during any period of four years and that the rate of royalty on black trap and hard mrrwn having been increased by the 197'4 Notification, it could not be increased again in 1975. A subsidiary contention raised was that the State Government had no powl!r to classify building stones into black trap and hard mrrum because by doing so what the State Government had done in effect and ' substance was to declare black trap and hard 111!.rrum as minor minerals and that it was only the Central Government which possessed the power to declare any mineral not covered by the definition of the expression "minor minerals" in clause (c) of section 3 of the 1957 Act to be a minor mineral. Both these 'contentions were rejected by a Division Bench of the Gujarat High Court consisting of Thakkar arid Mankad, JJ., by its judg- ment dated September 16-17, 1980. The Division Bench held that the 1974 Notification had not become operative and, therefore, in issuing the 1975 Notification the State Government had not , violated the proviso to section 15(3), and that building stones having been already included in the definition of "minor minerals"', there was no bar to the State Government classifying them into different varieties for the purpose of recovering royalty. Appeals have been filed iri this Court E challenging the correctness of the above judgment. The State of Gujarat has, however, not filed any appeal against this judgment.

By the 1976 Notification the Government of Gujarat made the Gujarat Minor Mineral (Second Amendment) Rules, 1976, ~ F substituting Schedule II to the said Rules. Schedule II prior to the said substitution was as follows

" SCHEDULE II

Rates of Dead Rent G [See Rule 22 (i)(b)]

1Copy pinpoint1. PCK" specified Minor llinerals.

For every 100 sq. meters or part thereof, upto 5 hectares Rs. 0.35P. H For each additional hectare or P•lrt thereof, exceeding 5 hectares :as. 50. 00

D.K. TRIVEDI v.'STATE [MADON, J] SQ3

2Copy pinpoint2. For other minor minerals

For every lQQ sq. meters or _part thereof upto 5 hectares Rs. Q.2QP.

For each additional hectare or B part ther.eof exceeding S hectares. Rs. 35.QQ

By the 1976 Notification Items 1 and 2 in Schedule 11 were substituted to read as follows :

"(l) for quarry leases for any minor minersl for c every hectare or part thereof: Rs.SQQ (Five hundred)

(2) for quarry parwana for any minor mineral for every pat'Hana: Rs. lQQ (One hundred)." ·n On March 26, 1979, the Minister for Mines ·made a statement in the Legislative Assembly announcing the decision to implement from Ap~il 1, 1979, the new policy of dead rent framed by the Government. According to the said statement, the policy was aimed at breaking the.hold of big lease-holders of minor minerals who, by finding loopholes in the said Rules, E had acquired leases for the same mineral in different districts and had established a ioonopoly in the market and had made a fortune by exploiting labourers snd eve.ding pa.yment of roya.lty. According to the ea.id statement, such lease-holders 1'quarded just enough minerals and created artificial shortages· in order to control the market and maintain high levels of profits, and some lease-holders had acquired control of are.as far in excess of the capacity of their crushers and did not allow entry to other industrialists. He further stated that under the said Rules lessees of minor minerals had to pay royalty on the basis of ioonthly returns but as true ioonthly returns were not submitted, evasion to the extent of five to ten per cent was taking place in the payment of royalty. ~Pursuant to this policy decision the 1979 Notification was issued by the Government of Gujarat. By the 1979 Notification the Government of Gujarat made the Gujarat Minor Minerals (Amendment) Rules, 1979, with effect from April 1, 1979, By this amendment a new Rule 21-B was inserted in the said Rules, H Rule 22 was amended, Chapter IV of the said Rules which dealt

504 SUPREME CotlRT REPORTS [1986] 1 S.C.R.

A with grant of quarrying permits in respect of lands in which\ mi,nerals belonged to the Government was delet•ed, Form D was amended, Forms, I, J and K were deleted, and Schedule I and II were substituted. By the substituted Schedule I, the rate of royalty on all minor minerals was specified as. ten paise per metric tonne. By the substituted Schedule II the rate of dead B rent per hectare or part thereof in respect of quarry leases was, enhanced to Rs .1, 200 in certain cases, Rs. 1, 500 in some other cases, Rs. 2,000 in one case and Rs. 3,000 in the'· remaining cases. So far as quarry parwanas were concerned, the rate was specified as one-tenth of the rate for quarry leases per parwana. c A writ petition was filed by the said Ambalal Manilal Patel in the Gujarat High Court, being Special Civil Application No.. 138 of 1978, challenging the enhancement in the rate of dead rent made by the 1976 Notification. This writ petition was dismissed by a learned Single Judge of that High D Court on February 16, 1978. The Letters Paten1: Appeal filed l against the judgment and order of the learned Single Judge was heard by a Division Bench of that High Court along with twenty-five writ petitions . which challenged the 1979 Notification. The said Letters Patent Appeal and writ petitions were allowed by a Division Bench consl.sting of Sheth E and Nanavati, .JJ. The Division Bench held that the conditions in a lease in respect of minor minerals relating to the financial liability of a lessee derived their authority from sub-section (3) of section 15 of the Mines and Minerals (Regulation and Development) Act, 1957, while conditions, 'other than those relating to a lessee's financial liability, t F regulating the grant of a lease derived th!!ir authority, from sub-section (1) of section 15, that the State Government had no power to enhance the rate of dead rent during the subsistence of a lease, and that Rule 21-B of the Gujarat Minor Mineral Rules, 1966, and the 1979 Notification were ultra vires section 15 and sub-clause (g) of clause (1) of G Article 19 of the Constitution. The Division Bench accordingly issued a writ of mandamus against the State Government ~ directing it to desist from enforcing the said Rule 21-B and ' the 1979 Notif:lcation. The Division Bench also made the same declaration in respect of the 1976 Notification and issued the same mandaD11s in respect thereof. The said judgment of the H Division Bench is. reported as Smt. Sonbai Pethalji v. State of Gujarat & Anr. XXI (2) 1980 (2) Guj. L.R. 530.

D.K. TRIVEDI v. STATE [MAOON, J] sos

A The Government of Gujarat accepted the said judgment and did not come in appeal to this Court. Certain lessees of mining and quarry leases, however, have approached this Court by way of Appeals and Writ Petitions challenging the correctness of the judgment in Smt. Sonabai's Case. In view of the said judgment, the Government of Gujarat issued a circular addressed to all Collectors, District Development Officers and the Director, Geology and Mining, Ahmedabad, being Circular *No. M.C.R. 2180 (166) C1lll dated February 12, 1981, stating that in view of the aforesaid judgment of the Division Bench the position prior thereto would prevail and that Chapter IV of the said Rules which was deleted by the 1976 Notification would stand revived and would be applied. The Government thereafter made the Gujarat Minor Mineral (Amendment) Rules, C 1981, by issuing the 1981 Notification which came into force on June 20, 1981, By the 1981 Notification Rule 21-B was deleted, Rule 22 was amended, Chapter IV and certain Forms were inserted, Schedule I to the said Rules was substituted iand Schedule II thereto deleted. Several lessees of mining and quarry leases filed writ petitions in the Gujarat High Court D challenging the validity of the 1981 Notification and the said Circular. These writ petitions were rejected on the ground that as connected proceedings were pending in this Court, it was open to the petitioners to move this Court if they so desired. ACcordingly, the said petitioners as also others have filed Writ Petitions in this Court challenging the validity of the 1981 Notification and the said Circular as also in some cases Appeals against the order rejecting the writ petitions.

' The parties before us - whether Petitioners, Appellants, or Respondents. - fall in different groups according to how their interests are affected by one or the other of the impugned Notifications, They have, therefore, advanced different sets of submissions at the hearing of these Writ Petitions and Appeals. The reason for this is obvious. For extracting or excavating certain classes of minor minerals a larger surface area is required than for extracting or If excavating other classes of minor minerals, Thus for clay and G ' earth a larger surface area is required than for bentonite because in the case of bentonite mining is required to be deeper. The result is that lessees of larger surface areas are affected more when the rate of dead rent is enhanced while the lessees of smaller surface areas are affected more when the · rate of royalty is enhanced. H

506 SUPREME COURT REPORTS [1986] 1 s.c.R.

A In order to understand the controvere1y between th~· parties and the·rival submissions advanced at the Bar, it is necessary to trace briefly the legislative history of the enactments providing for the regulation of mines and the control and development of minerals in India and· then to refer to the relevant statutory provisions in· that behalf extracting B such of them as are necessary. There was no :statute dealing with these matters prior to the enactment of the Mines and Minerals (Regulation and Development) Act, 1948 (Act No. LUI• of 1948) but they were governed by executive rules. Rules for the grant of mineral concessions in British India were for the first time made by the Department of Revenue and Agriculture c (Geology and Minerals) by a resolution dated December 13,

1894. These rules were revised in 1899. Neither the 1894 Rules nor the 1899 Rules made any mention of minor minerals. In 1913 revised rules were made by Resolution No. 7552·-7581-121 dated September 15, 1913. These rules were intended to provide guid- ance to officials of the Government in grantJlng prospecting licences and mining leases. Unlike the previous rules , these j rules for the first time, made a reference to minor minerals, the extraction of which was to be regulated by such separate rules as the Local Governments might prescribe' in accordance with local circumstances and requirements. No exhaustive defi- nition of minor minerals was given, but they Included slate, building stone, limestone and clay.

Under the Government of India Act, 1935, the legislative field of regulation of mines and development of minerals was divided between the Central Legislature and the Provincial Legislatures. Entry 36 in List I of the Seventh Schedule to~ F that Act (namely, the Federal Legislative List) provided as follows :

"36. Regulation of mines and oilfields and mineral development to which such regulation and develop- ment under Federal control is declared by Federal G law to be expedient in the public interest.''

Entry 23 in List II in the Seventh Schedule to that Act" (namely, the provincial Legislative List) provid.ed as follows:

"23. Regulation of mines and oilfields and mineral H ·development subject to the provisions of List I

D.K. TRIVEDI v. STATE [MAOON, J) 507 A

with respect to regulation and development under Federal control."

The word "Federal" in the above entries was substituted by the word "Dominion" by the India (Provisional Constitution) B Order, 1947.

No legislation was, howe1er, enacted in pursuance of the • above power until after Independence, but in 1939 the Government of India made the Mining Concessions (Central) Rules, 1939, or regulating grants of prospecting licences and mining leases in Chief Commissioner's Provinces and British c Baluchistan. Rule 6 of the 1939 Rules provided that these Rules were not to apply to minor minerals such as slate, building stone, limestone and clay, the extraction of which was to be regulated by such separate rule.s as the Chief Commissioner might prescribe. Thus, the provisions relating to minor minerals in the 1939 Rules were similar to those in the D . \ 1913 Rules and the list of minor minerals was also identical ' under these two sets of rules. Some of the Provincial Governments, such as the Governments of Assam, Bihar, Bombay and the United Provinces, also framed their own rules for grant of mineral concessions. E The need for Central regulation of mines and oilfields and mineral development began to be increasingly felt and became highlighted during the Second World War with the result that certain key minerals had to be controlled under the Defence of India Act, 1939. It was recognized that a planned ,) and uniform policy of mineral development was essential to economic and industrial progress. After Independence the Government of India set out in its Industrial Policy Resolu- tion of April 6, 1948, the policy which it proposed to pursue in the industrial field. The Industrial Policy Resolution included minerals· amongst the industries whose location had to be governed by economic factors of all-India import or which required considerable investment or a high degree of technical 1li skill and consequently had to be the subject of Central re- 7 gulation and control. Accordingly, in pursuance of the power conferred by Entry 36 in the Federal Legislative List the , Legislature of the Dominion of India enacted on September 8, 1948, the Mines and Minerals (Regulation and Development) Act, H 1948 (hereinafter referred to as "the 1948 Act"). The object

508 SUPREME COURT REPORTS [1986] 1 S.C.R.

of the 1948 Act was to regulat,e mines and oilfields and.f ' mineral development on the lines contemplated in the Industri- · al Policy Resolution of April 6, 1948 (see the Statement of Objects and Reasons to the Legislative Bill which when enacted became the Mines and Minerals (Regulation and Development) B Act, 1948, published in the Gazette of India, 1948, Part V, page 601,c The 1948 Act was brought into force on October 25, 1949, by Notification No. M.II. 155(24)-1 dated October 8, 1949, published in the Gazette of India, Extraordinary, 1949,.• at page 2075. ·

C Clause (c). of section 3 of the 1948 Act defined "miner- als" as including "natural gas and petroleum". Section 5(1) conferred power upon the Central Government to make rules to regulate the grant of mining leases or for prohibiting the grant of such leases in respect of any mineral or in any area. Under clause (d) of section 5(2), in part.icula:~, and without prejudice to the generality of the power. conferred by section 5(1), such rules could provide for "the fixing of the maxi1111m f and minimum rent payable by a lessee, whet he,- the mine is · worked or not." Section 6(1) conferred power upon the Central Government to make rules for the conservation and development of minerals. Under clause (i) of section 6(2), in particular, and without prejudice to the generality of the power conferred by section 6(1), such rules could provide. for "the levy and collection of royalties, fees or taxes in respe·~t of minerals mined quarried, excavated or collected". Section 7 conferred upon the Central Government the power to make rules for the purpose of modifying or altering the terms and conditions of any mining lease granted prior to the colillllencement of the 1948 ~ Act so as to bring such lease in conformity with the rules made under section 5 and 6. Under section 10, all rules made under the 1948 Act were to be laid, as soon as may be after they were made, before the Central Legislature and after the counnencement of the Constitution of India, before the House of the People.

In exercise of the power conferred by section 5 of the 1948 Act the Central Government made the Mineral Concession~ Rules, 1949, for regulating the grant of prospecting licences and mining leases for minerals other than petroleum and natural gas. The said Rules came into force on October 25, 1949, namely, the date on which the 1948 Act was brought into

D.K. TRIVEDI v. STATE [MADON • .Jl 509 A ~ force. Rule 4 of the said Rules expressly provided that the said Rules "shall not apply to minor minerals, the extraction of which s)1all be regulated by such rules as the Provincial Government may prescribe." After the coamence~nt · of the 0

Constitution, by Notification No. M.11-155(92) dated October 29, 1951\ the word "Provincial" was substituted by the word B "State". clause (ii) of Rule 3 defined the expression '~minor mineral". The said definition in its finally amended form was ., as follCMS

"(ii) 'minor mineral' means building stone, bould- er, shingle, gravel, Chalcedony pebbles used for ball mill purposes only, limeshell kankar and lime- C stone used for . lime burning, mrrum, brick-earth, Fuller's earth, Bentonite, ordinary clay, ordinary sand used for non-industrial .purposes, road metal, reh-matti, slate and shale when used for building material." ' D ) Although the said Rules did not apply to min9r minerals, in view of certain arguments · advanced at the Bar it would be useful to look at the material provisions of Rule 41 of the said Rules as finally amended. Rule 41 prescribed the conditions which every mining lease was to include. 'nle provisions of the said Rule 41 material for our purpose were E as follCMs:

"41. Conditions - (1) Every mining lease shall include the following conditions;- F

(i) The lessee shall pay royalty on ainerals despatched from the leased areas at the rate epecif ied in the First Schedule to these rules as in force on the date of the grant of the lease; G Provided that . _the lessee shall pay royalty at such revised rates as may be notified from time to time;

Provided further that the rate of royalty shall not be revised more than once in two years, nor it shall be in excess of twenty percent of the sale H value of the mineral at the pit's mouth.

510 SUPREME COURT REPORTS [1986] 1 $.C.R.

A ( i-:-A) · Where the lessee is a Gcnrernmerit or . a . ~asi--O>vernment organisation, the rate. of ToyaltY.j.. s~ll be fixed by the Central Government · bf negotiation between the lessor and the lessee~- · . ·, x x x · X

B (iii) The lessee shall also PaY, for . ev~ry _year, except the first year of the leaSE!, .suth year.l y 4 dead rent within the limits specified -in the :'l'hird Schedule to these · Rules, as may ~ fixed by -~he · State Government in the lease; and if the leas~. permits the wo~k.iog of more than one Ddne~~l. ·.·in::·ih~ c. same area, .the State Government may duir·ge··:.separate dead rerit in respect of ·each mineral:

Provided that the lessee -shall be liable to pay the dead-rent or royaity in respect of each mineral, whichever be higher in aioount, but not both. · D (iv) The lessee shall also pay, for the surface area used by him for the purposes of the mine, surface rent at such rate, not exceeding the land revenue and ceases assessable on the land-, as may be specified by the State Government in the lease. E x x x x

Thus, even after the enactment of the 1948 Act and the framing of the Mineral Concession Rules, 1949, minor minerals continu- ed to be governed by rules made by the State Gove!rnments. 1-. F Until the coming into force of the State Reorganisation Act, 1956, on November 1, 1956, the territories of the State of Bombay included the territories now forming part of .the State of Gujarat except Saurashtra which was a Part B State and Kutch which was a Part C State • . Under section 8 of the G States Reorganisation Act, the territories of the then existing States of Saurashtra and Kutch became part of the i territories of the State of Bombay.

It will be useful to refer to the rules in force in thi State of Bombay as at the date of the reorganization oJ li states.

D.K. TRIVEDI v. STATE [MADON, J] 511

A ~ By order No. IND/Q/58/2500 dated November 18, 1949, the Government of Saurashtra made regulations governing the operation of various kinds of quarries in Saurashtra. Schedule I to the said Order contained rules in that behalf. Rule (7) provided as follows:

"(7) A surface rent and dead rent or minimum

. Royalty at the rate specified in schedules V and VI shall be recovered on all quarry materials permitted or licensed to be quarried and removed under Rule (2)."

The Saurashtra Rules applied . to white clay, stones and other C minerals specified in Schedule V to the said Order.

By Notification No. MNL-1154-M dated December 28, 1954, the Government of Bombay in exercise of the power conferred by Rule .4 of .the Mineral Concession Rules, 1949, made the Bombay )Minor .Miner al Extraction Rules, 1955, which came into force on 0 D June 1, 1955. Clause :(iv) of Rule 2 defined "Quarrying lease". The said definition was as follows :

"(iv) 'quarrying lease' means a lease to mine, quarry, bore, dig and search for, win, work and carry away any minor mineral specified therein". E

Rule 18 prescribed the conditions which every quarrying lease was to include. The relevant provisions of the said Rule 18 were as follows

"18. Conditions. - F

( 1) Every quarrying lease shall include the following conditions :·-

(i) The le.ssee shall pay royalty on minor minerals despatched . ftom the leased area at the rates G specified in Schedule I to these Rules : ) Provided that such rates shall be liable to be revised once in every 5 years.

512 SUPREME COURT REPORTS [19861 1 s.c.R. A

(ii) The lessee shall also pay for every year of<. the lease such yearly dead rent within the limits specified in Schedule II to these Rules as may be fixed by the Collector in the lease; and if the lease permits the working of more than one mineral B in the same area, the Collector may fix separate dead rent in respect of each mineral :

Provided that the lessee shall be liable to pay the ~ dead rent or royalty in respect of each minor mineral, whichever be higher in amount, but not c both.

(Hi) The lessee shall also pay, for the surface area used by him for the purposes c1f the quarry, surface rent at such rate, not exce1~ing the land revenue and ceases assessable on thE• land, as may be fixed by the Collector and specified in the lease.

x x x x." Under the Government of India Act, 1935, "petroleum and other liquids and substances declared by Fede1~al law to be dangerously inflammable, so far as regards possession, storage and transport" formed a separate legislative topic being Entry 32 in the Federal Legislative List, while oilfields and mineral oils fell under Entry 36 in the said L:Lst along with mines and mineral development. Under the Constitution of F India, hOlll'ever ,. the old Entry 36 was divided into two and the )- regulation and development of oilfields and mineral oil resources became a separate legislative top!.c along with petroleum and petroleum products, and other liquids and subs- tances declared by Parliament by law to be dangerously inflam- mable. The relevant legislative Entries in the Ccmstitution of G India are Entries 53 and 54 in List I in the Se,1enth Schedule to the Constitution of India, namely, the Union List. These two Entries read as follows

"53, Regulation and development of oilfields and mineral oil resources; petroleum and petroleum H products; other liquids and substancEos declared by Parliament by law to be dangerously inflammable.

D,K, TRIVEDI v. STATE [MADON, j) 513 A

54. Regulation of mines and mineral development to the extent to which such regulation and develo_pment under the control of the Union is declared by Parliament by law to be ex_pedient in the public interest." B Entry 23 in List II in the Seventh Schedule to the Constitu- tion, namely, the State List, corresponds to Entry 23 in the "' Provincial Legislative List in the Government of India Act, 1935, and is as follows :

"23. Regulation of mines and mineral development subject to the provisions of List I with respect to c regulation and development under the control of the Union."

In 1957 Parliament decided that the regulation and develo_pment of mines and minerals should feature by themselves D I in a separate Act. Accordingly Parliament enacted on December 28, 1957, the Mines and Minerals (Regulation and Development) Act, 1957 (Act No. 67 of 1957), hereinafter referred to as "the 1957 Act". Section 32 of the 1957 Act amended the 1948 Act in the manner set out in Schedule III to the 1957 Act so as to remove from the 1948 · Act all references to mines and E minerals and to confine it to oilfields and mineral oil · resources. The short title of the 1948 Act was also amended to read "The Oilfields (Regulation and Development) Act, 1948", and its long title was amended to read "An Act to provide for the regulation of oilfields and for the development of mineral -I oil resources". The 1957 Act was btought into force on June 1, F 1958, by Notification No. G.S.R. 432 dated May 29, 1958, published in the Gazette of India, Extraordinary, 1958, Part II, sec. 3(i), at page 225.

A number of provisions which till then had been dealt with under the rule-making powers of the Central Government G were transferred to the 195 7 Act in order to restrict the > scope of subsidiary legislation. Thus, instead of leaving it ' to the rules made by the Central Government to define the term "minor mineral", the definition of that term was embodied in the 1957 Act. Amongst the other provisions which fell within the scope of the rule-making powers of the Central Government H and were made part of the 1957 Act were the provisions for the

514 SUPREME COURT REPORTS (1986] l S.C.R.

A maximum period for which a prospecting licence or a miningl. lease was to be gr.anted and the power to prescribe the rates of royalty for various minerals (see the Statement Of Objects and Reasons to the Legislative Bill No. 49 of 1957, which when enacted became the 1957 Act, published in the Gazette of India, Extraordinary, dated July 29, 1957, Part II, sec.2, at B page 392). The 1957 Act was amended with retrospective effect by the Mines and Minerals (Regulation and Development) Amend- ment Act, 1958 (Act No. 15 of 1958). This Amendment Act dealt • with mining leases in respect of coal granted before October 29, 1949, and does not concern us. The 1957 Act was again amended by the Mines and "Minerals (Regulation and Development) C Amendment Act, 1972 (Act No. 56 of 1972), which came into force on September. 12, 1972. The Amendment Ac.t of 1972 was enacted mainly to carry out the reconnnendations made by the Mineral Advisory Board. Amongst the principal changes affected in the 1957 Act by the Amendment Act of 1972 were the imposi- tion of a ceiling on the individual holdings of prospecting licences and mining leases; the imposition of a specific obli- i gation on holders of mining leases in respect of payment of royalty for minerals removed by their agents, sub-lessees or employees; providing a statutory basis for calculation of dead rent; and the application of Minor Mineral Rules to quarry leases (see the Statement of Objects and Reasons to the Legis- E lative Bill No. 83 of 1972, which when enacted became the Amendment Act of 1972, published in the Gazette of India, Extraordinary, dated August 21, · 1972, Part II, s'ec. 2, at page 828).

We will not turn to the relevant provisions of the 1957 1- F Act. Section 2 of the 1957 Act contains a declaration that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent provided in the 1957 Act. Certain definitions given in section 3 are important and may be repro- duced. These definitions are those contal.ned i'n clauses (a) G and (c) to (e) of the said section 3. These clauses pro-1ide as follows {_

"3. Definitions. -

In this Act, unless the context other1orise requires, H

D.K. TRIVEDI v. STATE [MADON, J] 515

A (a) 'minerals' includes all minerals except mineral oils;

x x x x B (c) 'mining lease' means a lease granted for the purpose of undertaking mining operations, and in- cludes a sub-lease granted for such purpose;

(d) ;mining operations' means. any operations · undertaken for the purpose of winning any mineral;

(c) 'minor minerals\ means building stones, gravel, c ordinary clay, ordinary sand other ·than sand used for prescribed purposes, and any other mineral which the Central Government may, by notification in the Official Gazette, declare to be a minor mineral". D It is pertinent to note that the term "minor minerals" came to be defined in a statute for the first time by clause (e) of section 3 of the 1957 Act. In addition to the minor minerals mentioned in the said clause (e),- boulder; shingle; chalcedony pebbles used for ball mill purposes only; limeshell, kankar and limestone used in kilns for manufacture of lime used as building material; llllrrum; brick-earth; Fuller's earth; bentonite; road metal; reh-matti; slate and shale when used for building material; marble; stone used for making household i utensils; quartzite and sandstone when used for purposes of ~ building or for making road m~til and household utensils; and F "' slatpetre, have been declared t·o be minor _minerals by varioue notifications issued by the Central Government. Under section 4A which was inserted by the Amendment Act of 1972, where in the interest of regulation of mines 8"'ld mineral development it .is · thought expedient to grant a mining 1ease in favour of a Government company or corporation owned or controlled by the G . Government and for that purpose to terminate prematurely a ) mining lease in respect of a mineral other than a minor mineral, it is for the Central Governlllent, after consultation with the State Government, to form the opinion with respect to such expediency, while it is for the State Government, after consultation with the Central Government, to form the opinion H with respect to such expediency in the case of a mining lease

516 SUPREME COURT REPORTS [19861 1 s.c.R. A in respect of any minor mineral. Section 5 prescribes the{, restrictions on the grant of prospecting licences and mining leases. Section 6 prescribes the maximum area for which a prospecting licence or mining lease. can be granted. Section 7 prescribes the period for· which a prospecting licence can be granted or renewed and section 8 prescribes the period for B which a mining lease can be granted or renewed. Section 9 !s important and requires to be reproduced in extenso. It reads as follows - .,

"9. "Royalties in respect of mining le.ases.- c ( 1) The holder of a mining lease gran.ted before the co11111encement of this Act shall, n1otwithstanding anything contained in the instrument of lease or in any law in force at such comnencement, pay royalty in respect of any mineral removed or consumed by him or by his agent, manager, employee, contractor D or sub-lessee from the leased area after such i co11111encement, at the rate for the time being specified in the Second Schedule in respect of that mineral.

( 2) The holder of a mining lease :~ranted on or after the commencement of this A.~t shall pay royalty in respect of any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub-lassee from the leased ares at the rate for the time being specified in the Second Schedule in respec~f that mineral. \-

(2A) The· holder of a mining lease, whether granted before or after the co11111encement of the Mines and Minerals (Regulation and Development) Amendment Act, 1972, shall not be liable to pay any royalty in respect of any coal consumed by a workman engag- G ed in a colliery provided that such consumption by the workman does not exceed one-third of a tonne 4 per month.

(3) The Central Government may, by nc1tificatir:!I in the Official Gazette, amend the Second Schedule so H as to enhance or reduce the rate at which royalty

D.K. TRIVEDI v. STATE [MADON, J] 517

A shall be payable in respect of any mineral with effect from such date as may specified in the notification :

Provided that the Central Government shall not B enhance the rate of royalty in respect of any mineral more than once during any period of four years."

The words "mineral removed or consumed by him or his agent, manager, employee, contractor or sub-lessee" were substituted in sub-sections (1) and (2) by the Amendment Act of 1972 for ( the words "mineral removed by him". Sub-section (2A) was inserted in section 9 by the same Amendment Act. The proviso to sub-section (3) was substituted by the Amendment Act of 1972 for the original proviso which read as follows :

"Provided that the Central Government shall not- I (a) fix the rate of royalty in respect of any mineral so as to exceed twenty per cent of the sale price of the mineral at the pit's head, or

(b) enhance the rate of royalty in respect .of any mineral more than once during any period of four years."

Section 9-A was inserted in the 1957 Act by the Amendment Act of 1972. It reads as follows : -I 9A. Dead rent to be paid by the. leasee. -

(1) The holder of a mining lease, whether granted before or after the colllllencement of the Mines and Minerals (Regulation and Development) Amendment Act, 1972, shall, notwithstanding anything contain- G ed in the instrument of lease or in any other law for the time being . in force, pay to the State Government, every year, dead rent at such r.ate as may be specified, for the time being, in the Third Schedule, for all the areas included in the instru- ment of lease : H

518 SUPREME COURT REPORTS [1986] l s.c.R. A Provided that wh_ere the holder of such mining lease '- becomes liable, under section 9, to pay royalty for any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee from the leased area, he shall be liable to pay either such royalty or the dead rent in respect of B that area, whichever is greater.

(2) The Central Government may, by notification in the Official Gazette, amend the Third Schedule so as to enhance or reduce the rate at which the dead rent shall be payable in ree1pect of any area c covered by a mining lease and such E!nhancement or reduction shall take effect from such date as may be specified in the notification :

Provided that the Central Government shall not enhance the rate of the dead rent in respect of any , D such area more than once during any period of four ' years."

Sections 10 to 12 prescribe the procedure for obtaining prospecting licences and mining leases in respec:t of land in which the min~rals vest in the Government. Under section 10, E such applications are to be made to the concerned State Government and the State Government is to grant or refuse to grant such licence or lease having regard to the provisions of the 1957 Act and any rules made thereunder. Under the Mineral Concession Rules, 1949, the procedure was very similar with differences which are not material for our purpose. Sections \- F 13 to 16 form a group of sections under the heading "Rules for regulating the grant of prospecting licenceos and mining leases". Section 13 confers rule-making power upon the Central Government. The relevant provisions of that section are as follows : G "13. Power of Central Government to 1118ke rules in respect of llinerals. - ~

(1) The Central Government may, by notification in the Official Gazette, make rules for regulation the grant of prospecting licences and mining leases.in H respect of minerals and for purposes connected therewith.

D.K. TRIVEDI v. STATE [MAOON, J] 519

A (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters , namely ·-

x .x x x B

(i) the fixing and collection of dead rent, fines, fees or other charges.and the collection of royal- ties in respect of -

(i) prospecting licences, (ii) mining leases , C (iii)minerals mined, quarried, excavated or collec- ted;

x x x

(r) any other matter which is to be, or may be, D prescribed under. this Act."

Sections 14 and 15 provide as follows :

"14. Sections 4 to 13 not to apply to minor alnerals. - E

The provisions of sections 4 to 13 (inclusive) shall not apply to quarry leases, mining leases or other mineral concessions in respect of miJ>or -i minerals. F

15. POifer of State Government to make rules in respect of llinDr alnerals. -

(1) The State Government may, by notification in the Official Gazette, make rules for regulating the grant of quarry leases, mining leases or other G mineral concessions in respect of minor minerals and for purposes connected therewith.

(2) Until rules are made under sub-section (1), any rules· made by a State Government regulating the g;-ant of quarry leases, mining leases or other H

5.20 SUPREME COURT REPORTS (19861 1 s.c.R.

A mineral concessions in respect of minor minerals 4- which are in force iuoediately before the coaoence- ment of this Act shall continue in force.

(3) The holder of a mining lease or any other. mineral concession granted under any rule made B under sub-section (l) shall pay royalty in respect . of minor minerals removed or consllllll!<i by him or by his agent, manager, employee, contractor or sub- " lessee at the rate prescribed for the' time being in the rules framed by the State Government in respect of minor minerals : c Provided that the State Government shall not enhance the rate of royalty in respect of any minor mineral for more than once during any period of ~ four years." D In section 14 and in sub-sections (l) and (2) of section 15 , the words "quarry leases, mfuing leases or other mineral concessions" were substituted by the Amendment Act of 1972 for the words "prospecting licences and mining le~1ses". Sub-sec- tion (3) was inserted in section 15 with retro,;pective effect by the same Amendment Act. Section 19 provides as follows : E

"19. Prospecting licences and llin:l:11g leases to be void if in contravention of Act. -

Any prospecting licence or mining lease granted, \- F renewed or acquired in contravention of the provisi!)ns of this Act or any rules or orders made thereunder shall be.void and of no effect.

Ellplanat:l:on. - Where a person has acquired more than one prospecting licence O•r mining lease in any G State and the aggregate area covered by such licences .or lea8es, as the case .may be, exceeds the ~ max:hmim area permissible under sect:lon 6, only that prospecting li~ence.or mining lease the acquisition of ;.w!iich has •resulted in such .maxiOP.1111 area being exceeded•.:shalL be deemed to be .void." H

D.K. TRIVEDI v. STATE [MADON, J] 52-1 A ~ Under section 20 the provisions of the 1957 Act and the rules made thereunder apply to the renewal of any prospecting licence or mining lease whether granted before or after the commencement of the 1957 Act. Under section 28(1), rules and notifications made by the Central Government are to be laid B before Parliament and to be subject to any modification which may be made by Parliament, and if not approved, are thereafter to be of no effect. Under section 29 all rules made or pur- ~ porting to have been made under the 1948 Act in so far as they related to matters for which provision was made in the 1957 Act and were not inconsistent therewith are to be deemed to have been made under the 1957 Act and to continue in force c until superseded by any rules made under the 1957 Act.

In exercise of the power conferred by section 13 of the 1957 Act, the Central Government, by Notification No. G.S.R. 1398 dated November 11, 1960, published in the Gazette of India dated November 26, 1960, Part II, sec. 3(i), at page D 1 1832, made. the Mineral Concession Rules, 1960. Rule 27 of the said Rules sets out the conditions to which every mining lease is to be subject. The relevant provisions of Rule 27 are as follows :

"27. Conditions. - (l) Every mining lease shall be E subject to the following conditions · and.· ·such conditions shall be incorporated .in every mining leaile -

x x x x -J F (c) the lessee shall pay, for every:. year,• ·except the first year of the leaile such' yearly dead :rent within the limits specified in .Schedule IV as' may be fixed from time to ·time by.the State ·Government and if the lease permits the wor~ing of iiiote than one mineral in the sale area, the State.Go~e1'nnliint G shall not charge separate dead rent in respect of each mineral :

Provided that the lessee shall be liable to pay the • dead rent of royalty in respect of each mineral whichever be higher in amount but not both; H

522 SUPREME COURT REPORTS (1986 J 1 s.c.R.

A (d) the lessee shall also, pay for the. surface area + used by him for the purpose of mining operations , surface rent and water rate at such rate not exceeding the land revenue, water and cesses assessable on the land, as may be specified by . the State Government in the lease; B x x x x

(5) If the lessee makes any default in payment of royalty as required by section 9 or commits a breach of any of the conditions other than those c referred to in sub-rule ( 4), the State Government shall give ootice to the lessee requiring" him to pay. the royalty or remedy the breach, as the case may be, within sixty days from the date of the notice and if the royalty is not p~icLor the breach is · not remedied within such petfod, the -State D Government may, without prejudice to any proceeding : that may be taken against him, deterIDine the lease and forfeit the whole or part of the security deposit."

In exercise of the power conferred by section 15( 1) of E the 195 7 Act · various State Governments have made rules in respect of minor minerals. Although these rules vary from State to State, there are certain broad featutres present in all of them. The majority of States provide for two types of mineral concessions, namely a lease on tenure basis and a permit to extract a specified quantity of a mi.n<u: mineral. In \- F all the _States the rules provide for the grant of a lease for a particular term of ·years varying from one year to twenty years. These _leases are variously described in different State rules as "mining lease", "quarrying lease" and "quarry lease" and are similar in nature to· the mining leasE•S granted under the Mineral Concession Rules, 1960. In most of-the State rules there is a provision for the grant of a permlt to excavate a specified quantity of a minor mineral from ~· specified area +. within a prescribed time. These permits are refer.red to iii different State rules as "permit", "quarrying permit", "mining permit" and. "short-term permit". In some of the State rules • there is also a provision for the grant of a prospecting licence. All State rules which provide for payment of royalty

D.K. TRIVEDI v. STATE [MADON, J] 523

A and dead rent contain a provision that either dead rent or 4 royalty, whichever is higher in amount, but not bo<:h, would be p·ayable. In addition, most State rules also contain a provi- sion for the payment of surface rent. In certain State rules, for instance, those of the Andhra Pradesh and Tamil Nadu, royalty is called "seigniorage fee" (See the "Digest of Minor B Mineral Lawe of India" issued in 1974 by the Controller, Indian Bureau of Mines, Nagpur, PP• 5-8).

*). With effect on or from May 1, 1960, by the Bombay Reorganisation Act, 1960, certain territories comprised in the State of Bombay were formed into R separate State, namely, the State of Gujarat, and the territories which remained with the C State of Bombay were renamed as the "State of Maharashtra". The State of Gujarat, however, did not, in the exercise of the power conferred by section 15(1) of the 1957 Act, make any rules for minor minerals until 1966 and until such rules were made, the· rules in force innnediately before the commencement , of the 1957 Act continued to apply in the State of Gujarat by D \virtue of the provisions of section 15(2). By Notification No. GU 125-MCR 2164/508'9/Clffi dated March 18, 1966, the Government of Gujarat made the Gujarat Minor Mineral Rules, 1966, for regulating the grant of mining leases in respect of minor minerals and for purposes connected therewith. These Rules will be hereinafter referred to as "the Gujarat Rules". The E Gujarat Rules came into force on April 1, 1966. Rule 41 of the Gujarat Rules repealed the Bombay Minor Mineral Extraction Rules, 1955, and all other rules in force in any part of the State of Gujarat innnediately before the coming into force of ~he Gujarat Rules. We will point out the relevant provisions _"'of the Gujarat Rules when we come to discuss the question of F ·the validity of Rule 21-B of the Gujarat Rules and the impugned Notiffaations and the impugned Circular dated February 12, 1981.

The first contention which was raised before us was that section 15(1) of the 1957 Act is unconstitutional as suffering G from the vice of excessive delegation of legislative power to ~he executive. It was submitted that the rule-making power conferred upon the State Governments by section 15(1) was an uncanalized power as no guidelines were prescribed for its exercise and thus it enabled 'the State Governments to act arbitrarily and as they liked with respect to leases of minor H

524 SUPREME COURT REPORTS [19B6J l s.c.R. A minerals, We find that this contention is based upon a fallacy ~ inasruch as it is founded upon reading the provisions of section 15(1) in isolation and without reference to the other provisions of the 1957 Act and its legislative history.

The 1957 Act is made in exercise of the powers conferred B by Entry 54 in the Union List. The said Entry ;,4 and Entry 23 in the State List· fell to be interpreted by a Constitution Bench of this Court in Baijnath Kedia v. State uf Bihar & Ors. • .. [1970] 2 S.C,R. 100. In that case this Court held that Entry 54 in the Union List speaks both of regulation of mines and mineral development and Entry 23 in the State List is subj-ect c to Entry 54, Under Entry 54 it is open to Parliament to declare that it is expedient in the public interest that the control in these matters should vest in the Central Govern- ment. To what extent such a delcaration c,an go is for Parlia- ment to determine and this must be commensurate with public interest but once such declaration is made and the extent of such regulation and development laid down the subject of the j, ,\ ,. legislation to the extent so laid down becO!llE!S an exclusive \· subject for legislation by Parliament. Any legislation by the State after such declaration which touches upon the field disclosed in the declaration would necessarily be unconstitu- tional because that field is extracted from the legislative competence of the State Legislatute. In that case the Court further pointed out that the expression "under the control of the Union" occurring in Entry 54 in the Union List and Entry 23 in the State List did not mean "control of the Union Government" because the Union consists of three limbs, namely, Parliament, the Union Government and the Unio11 Judiciary, and ~ 1 F the control of the Union·which is to be.exercised under the said two Entries is the one to be exercised by Parliament, namely, the legislative organ of the Union, which is, therefore, the control by the Union. The Court further held that the Union had taken all the power in respec~ of minor minerals to itself and had authorized the State Governments to G make rules for the regulation of leases E1nd thus by the declaration made in section 2 and the enactment of section 15 the whole of the field relating to minor minerals came withinl the jurisdiction of Parliament and there was no scope left to the State Legislatures to make any enactlllE.'!lt · with respect thereto. The court also held that by giving the power H

D.K. TRIVEDI v. STATE [MADON, J] 525

J;. to the State Governments to make rules, the control of the Union was not negatived but, on the contrary, it established that the Union was exercising the control. One of the conten- tions •aised in that case was that section 15. was unconstitu- tional as the delegation of legislative-power made by it to B the rule-making authority was excessive. This contention was, however, not decided by the Court as the appeals in that case were allowed on other points •

..The rule-making power conferred by section 15 (1) was for regulating the grant of prospecting licences and mining leases and for purposes connected therewith prior to the C Amendment Act of' 1972 and thereafter is for regulating the grant of quarry leases, mining leases and other mineral rgncessions in respect of minor minerals and for purposes connected therl;!with. The phraseology of section 15(1) is the same as that of section 13(1) which confers rule-making power \,. upon the Central Government with this difference that by the D •\ Amendment Act of 1972 the expression "quarry leases, mining leases or other mineral concessions" has been substituted in section 15(1) for the words "prospecting licences and mining leases" while the expression "prospecting licences and mining leases" in section 13(1) remains unchanged, E The term "minerals" is defined by clause (a) of section 3 as including "all minerals except mineral oils". This definition would thus include minerals which are minor minerals as also minerals other than minor minerals. The term -~"minor minerals" is, however, separately defined by clause (e) - I because the power to make rules in respect thereof is vested F · by section 15(1) in the State Governments while the power to make rules with respect to minerals other than minor minerals is vested in the Central Government. The word "minerals" in different se"ctions of the 1957 Act is used with the meaning assigned to it by clause (a) of section 3, that is, as denoting "all minerals except mineral oils", unless the con\ G text requires otherwise, and where the Act wishes to make a ..., minor minerals, distinction between minor minerals and minerals other than it does so expressly. For instance, sub-section (l) of section 4A speaks of "premature termination of a mining lease in respect of any mineral, other than a ·raf.nor mineral" and sub-section (2) of section 4A speaks of H "premature termination of a mining lease in ·respect of any

526 SUPREME COURT REPORTS [19861 1 s.c.R. A

minor mineral". To take another illustration, under section 19 .~ any prospecting licence or mining lease grante,d, renewed or acquired in contravention of the provisions qf the 1957 Act or any rules or orders made thereunder is to be void and of no effect. This section would apply to a prospecting licenc'e or a B mining lease both in respect of minor minerals and minerals other than minor minerals. Were it not so, the result would be startling for while a prospecting licence or a mining lease in respect of minerals other than minor minerals would be void ~~ and of no effect if it is in contravention of the provisions . of the 1957 Act or any rules or orders made thereunder, in the c case of a prospecting licence or a mining lease in respect of minor minerals such licence or lease would not b1~ void even if it is in contravention of the provisions of the 1957 Act or any rules or orders made thereunder. 'fhe Explanation to section 19 is an illustration of a case wher.e the context excludes a prospecting licence or a mining lease in respect of D minor minerals and this is by reason of 1:he reference ' ' contained in that Explanation to section 6 b•icause by the ' express terms of section 14, section 6 does not apply to minor minerals. Thus, the word "minerals" wherever used in the 1957 Act would include minor minerals unless minor minerals are expressly excluded or the context otherwise requ:Lres. E Bearing this in mind, we now turn to examine the nature of the rule-making power conferred upon the State Governments by section 15(1 ). Although under section 14, section 13 is one of the sections which does not apply to minor minerals, the

F language of section 13(1) is in pad materia with the language of section 15(1). Each· of these provisions confers the power \- ,. to make rules for "regulating". The Shorter Oxford English Dictionary, Third Edition, defines the word "'regulate" as meaning "to control, govern, or direct by rule or regulations; to subject to guidance or restrictions; to adapt to circums- tances or surroundings". Thus, the power to regulate by rules given by sections 13(1) and 15(1) is a power to control, govern and direct by rules and grant of prospecting licences and mining leases in respect of minerals othe'r. than minor minerals and for purposes connected therewith in the case of " section 13(1) and the grant of quarry leases, mining leases and other mineral concessions in respect of minor minerals and for purposes connected there...with in the case of section 15(1) and to subject such grant to restrictions and to adapt them to

D.K. TRIVEDI v. STATE [MAOON, J) 527

~ . the circumstances of the case and the surroundings with refer-.· ence to which such power is exercised. It is pertinent to bear in mind that the power to regulate conferred by sections 13(1) and 15(1) is not only with respect to the grant of licences and leases mentioned in those sub-sections but is also with respect to "purposes connected therewith", that is, purposes connected with such grant.

Entry 54 in the Union List uses the word "regulation". ;'Regulation" is defined in the Shorter Oxford English Dictionary, Third Edition as meaning "the act of regulating, or the state of being regulated". Entry 54 ·reproduces the language of Entry 36 in the Federal Legislative List in the Government of India Act, 1935, with the omission of the words "and oiifields". When the Constitution came to be enacted, the framers of the Constitution knew that since early days min~s and minerals were being regulated by rules made by Local " Governments. They also knew that under the corresponding Entry • 36 in the Federal Legislative List, the 1948 Act had been enacted and was on the statute book and that the 1948 Act conferred wide rule-making power upon the Central Government to regulate the grant of mining leases and for the conserva- tion and development of minerals. It also knew that in the exercise of such rule-making power the Central Government had made the Mineral Concession Rules, 1949, and that by Rule 4·of the said Rules the extraction of minor minerals was left to be regulated by rules to be made by the Provincial Governments. Thus, the makers of the Constitution were not only aware of • the legislative history of the topic of mines and minerals but - I were also aware how the Dominion Legislature had interpreted Entry 36 in the Federal Legislative Listin enacting the 1948 Act. When the 1957 Act came to be enacted, Parliament knew that different State Governments had, in pursuance of the provisions of Rule 4 of the Mineral Concession Rules, 1949, made rules for regulating the grant of leases in respect of minor minerals and other matters connected .therewith and for this reason it expressly provided in sub-section (2) of ..,section 15 of the 1957 Act that the rules in force immediately before the commencement of that Act would continue in force until superseded by rules made under sub-section (1) of section 15. Regulating the grant of mining leases in respect of minor minerals and other connected matters was, therefore, not something which was done fur the first time by the 1957

528 SUPREME COURT REPORTS [1!186] 1 s.c.R. A

Act but followed a well-recognized and accepted legislative .w practice. In fact, even so far as minerals other than minor minerals were concerned, what Parliament did, as pointed out earlier, was to transfer to the 1957 Act certain provisions which had until then been dealt with under the rule-making B power of the Central Government in order to restrict the scope of subordinate ?egislation. To take into account legislative history and practice when considering the validity of a statu- 1. tory provision or while interpreting a legislative entry is a 1 '· well-established principle of construction of statutes : see, for instance, State of llollbay v. Narotham:las Jetbabai and Anr. [1951] s.c.R. 51 and State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. [1959] s.c.R. 379.

There is no subst~nce in the contention that nu 1- guidelines are provided in the 195 7 Act for the exercise of the rule-making power of the State Governments under section D 15(1), As mentioned earlier, section 15(1) ·is in psri materia " with section 13(1), Section 13 0 however, contai11s sub-section • (2) which sets out the particular matters wil:h respect to which the Central Government may make rules "ln particular, and without prejudice to the generality of the foregoing power", that is, the rule-making power conferred by E sub-section (1), It is well settled that where a statute confers particular powers without prejudice to the generality of a general power alreadp conferred, tt.e particular powers are only illustrative of the general power and do not in any way restrict the general power. Section 2 of the Defence of

F India Act, 1939, as amended by section 2 of the Defence of t India (Amendment) Act, 1940, conferred upon the Central - Government the power to make such rules as appeared to it "to be necessary or expedient for securing the defonce of Britis,h India, the public safety, the maintenance of public order or the efficient prosecution of war, or for maintaining supplies and services essential to the life of the co1lllllll1ity". Sub- G section (2) of section 2 conferred upon the Centnal Government the power to provide by rules or to empower any authority to make orders providing for various matters set out in the said• sub-section. This power was expressed by the opening words of the said sub-section (2) to be "Witho11t pr1~judice to the generality of the powers conferred by sub-section ( 1)". In H King Emperor v. Siboath Banerji and Ore., [1944-1945] 72 I.A. 241, the Judicial Committee of the Privy Council held (at pages 258-9) :

D.K. TRIVEDI v. STATE [MAOON, J] 529

A "In the opinion of their Lordships, the function or sub-s. 2 is merely an illustrative one; the rule- making power is conferred by sub-s. 1, and the rules which are ref erred to in the opening sentence of sub-s ,' 2 are the rules which ·are authorized by, B and made under, sub-s. l; the provisions of sub-s. 2 are not restrictive of sub-s. l,,as, indeed, is expressly stated by the words 'without prejudice to the generality of the powers conferred by sub-s. 1'."

The above proposition of law has been approved and accepted by this Court in Om Prakash and Ors. v. Union of India and Ors., c [1970] 3 s.c;c. 942,944-5 and Shiv Kirpal Singh v. Shri V.V.Giri [1971] 2 s.c.R. 224-5.

A provision similar to sub-section (2) of section 13, however, does not find place in section 15. In our opinion, D \ this makes no difference. What sub-section (2) of section 13 does is to give illustrations of the matters in respect of which the Central Government can make rules for "regulating the grant of prospecting licences and .mining leases in respect of minerals and for purposes connected therewith". The opening clause of sub-section (2) of section 13, namely, "In parti- E cular, and without prejudice to the generality of the forego- ing power", makes it clear that the topics set out in that sub-section are already included.in the general power confer- red by sub-section (1) but are being listed to particularize • them and to focus attention on them. The particular matters in -i respect of which the Central Government can make rules under sub-section (2) of section 13 are, therefore, also matters with respect to which under sub-section(l) of section 15 the State Governments can make rules for "regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for purposes connected there- with". When seed.on 14 directs that "The provisions of sections 4 to 13 (inclusive) shall not apply to quarry leases, ,. mining leases or other mineral concessions in respect of minor minerals", what is intended is that the matters contained in those sections, so far as they concern minor minerals, will not be controlled by the Central Government but by the con- cerned State Government by exercising its rule-making power as H a delegate of the Central Government. Sections 4 to 12 form a

530 SUPREME COURT REPORTS [1986] l s.c.R.

A group of sections under the heading "General restrictions on .,, undertaking prospecting and mining operations". The exclusion of the application of these sections to mi.nor m:lnerals means that these restrictions will not apply to m:lnor m:lnerals but, that it is left to the State Governments to prescribe such restrictions as they think fit by rules made under section B 15(1). The reason for treating m:lnor m:lnerals differently from minerals other than m:lnor m:lnerals ·is ob"ious. As seen from the definition of m:lnor m:lnerals given in clause (e) of ,, section 3, they are minerals which are mostly used in local areas and for local purposes while m:lnerals other than m:lnor minerals are those which are necessary for industrial develop- C ment on a national scale and for the economy of the country. That is why matters relating to m:lnor m:lnerals have been left by Parliament to the State Governments while res•arving matters relating to minerals other than m:lnor minerals to the Central Government. Sections 13, 14 and 15 fall in the group of sections which is headed ''Rules for regulating the grant of prospecting licences and m:lning leases". These three sections ., have to be read together. In providing that SE!Ction 13 will not apply to quarry leases, m:lning leases or •lther mineral concessions in respect of minor minerals what was done was to take away from the Central Government the power to'make rules in respect of minor m:Lnerals and to confer that power by section 15(1) upon the State Governments. The ambit of the power under section 13 and under section 15 is , however, ·the same, the only difference being that in one case it is the Central Government which exercises the power in respect of minerals other than m:lnor minerals while in the other case it is the State Governments which do so in respect of m:lnor ·"' _ 1 F minerals. Sub-section (2) of section 13 which is illustrative of the general power conferred by section 13(1) contains sufficient guidelines for the State Governments to follow in framing the rules under section 15(1), and in the same way, the State Governments have before them the re11trictions and other matters provided for in sections 4 to 12 while fram:lng their own l'.llles under section 15(1).

The guidelines, for the exercise of the rule-making power ¥ under section 15(1) are, thus, to be found in the object for which such power is conferred (namely, "for regulating the grant of quarry leases, mining leases or other mineral conces- H sions in respect of m:lnor minerals and for purposes connected

D.K. TRIVEDI v. STATE [MADON, J] 531

A " •therewith)", the meaning of the word "regulating", the scope of the phrase "for -purposes connected therewith," illustra- tive matters set out in sub-section (2) of section 13, and in the restrictions and other matters contained in sections 4 to 12. B The next question to be considered is whether the rule- making power of the State Governments under section 15(1) .,.. includes a power to charge dead rent and royalty. Before embarking upon a consideration of this question, it will be useful to. know the meaning of the expressions "dead rent" and "royalty" and their connotation. Wharton's "Law Lexicon", Fourteenth Edition, at page 300, defines."dead rent" as: c "Dead Rent. A rent payable on a mining lease in addition to a royalty, so called because it is payable whether the mine is being worked or not. 11

·i The definition of "dead rent" given in, Black's "Law D Dictionary", Fifth Edition, at page 359, is as follows:

"Dead Rent. In English law, a rent payable on a mining lease in addition to a royalty, so called because it is payable although the mine may not be worked." E

Jowitt' s "Dictionary of English Law", Second Edition, at page 555, defines "dead rent" as : -~ -1 "Dead Rent,. a term sometimes used in mining leases in contradistinction to a royalty, to denote a F fixed rent to be paid whether the mine is produc- tive or not. See RENT."

The same Dictionary states under the heading "Rent", at page 1544 : G " When a mine, quarry, brick-works, or similar property is leased, the lessor usually reserves not only a fixed yearly rent but als~ a royalty or galeage rent, consisting of royalties (q.v.) varying with the quantity of minerals, bricks, etc., produced during each year. In tllis case the fixed rent is called a dead rent.''

532 SUPREME COURT REPORTS [1986 J 1 s.c.R. A ''Royalty" is defined in Jowitt's "Dictionary of English" Law", Second Edition, at page 1595,' inter alia, as :

"Royalty, a payment reserved by the, grantor of a patent, lease of a mine or similar right, and B payable proportionately to the use made of the right by the grantee. It is usually a payment of money, but may be a payment in kind, that is, of part of the produce of the exercise of the right. 'I' · See Rent."

c "Royalty" is defined in Wharton's "Law Lexicon" Fourteenth Edition, at page 839, as :

"Royalty, payment to a patentee by agreement on every article made according to his patent; or to an author by a publisher on every copy of his book D sold; or to the owner of minerals for the right of ·i working the same on every ton or other weight , raised."

The definition of "royalty" given in Black's "LEIW Dictionary", Fifth Edition, at page 1195, is as follows : E

"Royalty. Compensation for the use of property, usually copyrighted material or natural resources, expressed as a percentage of receipts from using the property or as an account per unit produced. A ~ payment which is made to an author or composer by \ - F an assignee, licensee or copyright holder in respect of each copy of his work which is sold, or to an inventor in respect of each article sold under the patent. Royalty is share of pmduct or profit reserved by owner for permitting another to G use the property. In its broadest aspect, it is share of profit reserved by owner for permitting another the use of property ••••

In mining and oil operations, a share of the product or profit paid to the owner of the property • ••.• "

D.K. TRIVEDI v. STATE [MADON, J] 533

A "In H.R.S. Murthy v. Collector of artttor and Anr., [1964] 6 S.C.R, 666, 673 this Court said that "royalty" normally con- notes the payment made for the materials or minerals won from the land.

In Hals bury' s "Laws of England", Fourth Edition in the volume which deals with ''Mines, Minerals and Quarries", namely, volume 31, it is stated irr paragraph 224 as follows : . ."J "224. Rents and royalties. An agreement for a lease usually contains stipulations as to the dead rents and other rents and royalties to be reserved by, and the covenants and provisions to be inserted in, the lease ....• "

The topics of dead rent and royalties are dealt with in Halsbury's "Laws of England" in the same volume under the ,. sub-heading "Consideration", the main heading being "Property ·\ demised; Consideration". Paragraph 235 deals with "dead rent" D and paragraph 236 with "royalties". The relevant passages are as foltows ·'

"235. Dead rent. It is usual in mining leases to reserve both a fixed annual rent (otherwise known as a 'dead rent', 'minimum rent' or 'certain rent') E and royalties varying with the amount of minerals worked. The object of the fixed rent is to ensµre that the lessee will work the mine; but it is some- times ineffective for that purpose. Another function of the fixed rent is to ensure a definite minimum income to the lessor in respect of the demise.

If a fixed rent is reserved, it is payable until the expiration of the term even though the mine is not worked, or is exhausted during the currency of the term, or is not worth working, or is difficult or unprofitable to work owing to faults or acci- dents, or even i f the demised seam proves to be non-existent."

"236. Royalties. A royalty, in the sense in which the word is used in connection with mining leases, is a payment to the lessor proportionate to the

534 SUPREME COURT REPORTS [1986] l s.c.R. A

amount of the demised mineral worked within a" specific period."

In paragraph 238 of the same volume of Hals bury' s "Laws of England" it is stated : B "238. Covenant to pay rent and royalties.

Nearly every mining lease contains a covenant by ~ the lessee for payment of the spec:lfied rent and royalties." c Rent is an integral part of the concept of a lease. It is the consideration moving from the lessee to the lessor for demise of the property to him. Section.105 of the Transfer of Property Act, 1982, contains the definitions of the terms "lease", "lessor", "lessee", "premium" and "rent" and is as follows : 7

"105, Lease defined. A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who . accepts the transfer on such terms. ~ F Lessor, lessee, premium and rent defined. \- The transferor is called the lessor, ~he transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent." G . In a mining lease the consideration usually moving from the lessee to the lessor is the rent for the area leased · (often called surface rent), dead rent and royalty. Since the·~ mining lease confers upon the lessee the right not merely to enjoy the property. as under an ordinary lease but also .to H extract minerals from the land and to appropriate then! for his own use or benefit, in addition to the usual rent for the srea

D.K. TRIVEDI v. STATE [~N, J] 535 A

"demised, the lessee is required to pay a certain amount in respect of the minerals extracted proportionate to the quantity so extracted. Such payment is called "royalty". It may, however, be that the mine is not worked properly so as not to yield enough return to the lessor in the shape of B royalty. In order to ensure for the lessor a regular income, whether the mine is worked or not, a fixed amount ~s provided to be paid to him by the lessee. This is called "dead rent".

"Dead rent" is calculated on the basis of the area leased while royalty is calculated on the quantity of minerals extracted or removed. Thus, while dead rent is a fixed return c to the lessor, royalty is a return which varies with the quantity of minerals extracted or removed. Since dead rent and royalty are both a return to the lessor in respect of the area leased, looked at from one point of view dead rent can be described as the minimum guaranteed &IK!Unt of royalty payable D ~ to the lessor but calculated on the basis of the area leased 1 and not on the quantity of· minerals extracted or removed. In 'fact, clause (ix) of Rule 3 of the Rajas than Minor Mineral Concession Rules, 1977, defines "dead rent" as meaning "the minimum guaranteed amount of royalty per year payable as per rules or agreement under a mining lease", Stipulations provid- ing for the lessee's liability to pay surface rent, dead rent E and royalty to the lessor are the usual covenants to be found in a mining lease.

The grant of a mining lease would thus provide for the - consideration for such grant in the shape of surface rent, _f dead rent and royalty. The power to. make rules for regulating F ·the grant!' of such leases would, therefore, include the power to fix the consideration payable by the lessee to the lessor in the shape of ordinary rent or surface rent, dead rent and royalty. If this were not so, it would lead to the absurd result that when the ·Goyernment grants a mining lease, it is granted gratis to a person who wants to extract minerals and G profit from them. Rules for regulating the grant of mining leases cannot be confined merely to rules providing for the -.rorm in which applications for such leases are to be made, the factors to be taken into account in granting or refusing such applications and other cognate matters. Such rules must neces- H sarily include provisions with respect to the consideration

536 SUPREME COURT REPORTS [1986] l s.c.tl.

for the grant. Under section 15(1), therefore, the State..; Governments have the power to make rules providing for payment of surface rent, dead rent and royalty by the lessee to the Government.

The Legislature and the rule-making authorities have B also throughout understood the power to make rules in respect of mining leases and minerals as including the power to charge dead rent and royalty. Section 5( l) of the 1948 Act ;; conferred powers upon the Central Government to make rules "for regulating the grant of mining leases". Section 6(1) of that Act conferred upon the Central Government the power to c make rules "for the conservation and development of minerals". Both section 5 and 6 contained a sub-section (<:) which set out the different matters in respect of which the Central ~ Government could make rules and both these sub-"Sections opened with the clause "In particular, and without prejudice to the generality of the foregoing power". As seen earlier, the D particular matters so set out were illustrative of the general .7 power conferred by the earlier sub-sections. Under clause (d) of section 5(2), the rules to be made by the Central Government could provide for "the fixing of the maxinllm and mininrum rent payable by a lessee, whether the mine is worked or not." This clause thus provided for a dead rent. Under E clause (i) of section 6(2), the rules to be made by the Central Government could provide for "the levy and collection of royalties, fees or taxes in respect of minerals mined, quarried, excavated or collected". Rule 41 of the Mineral concession Rules, 1949, made by the Central Government in exercise of the powers conferred by section 5 of the 1948 Act3 _ F prescribed the conditions which were to be include<! in every 1 mining lessee. The said Rule 41 provided for payment of royal- ty on minerals at the rate specified in the First Schedule to the said Rules in force on the date of the grant of the lease as also to pay royalty at such revise~ rates as may be notifi- ed from time to time. It also provided for payment of surface rent and further provided for payment of dead rent with a proviso that the lessee was liable to pay dead rent or royal- ty, whichever was higher in amount, but not both. Rules made~ by the State Governments in respect of minor minerals also provided for payment of these charges. As seen earlier, Rule (7) of the Saurashtra Rules provided for payment of surface rent and dead rent. Similarly, Rule 18 of the Bombay Minor

D.K. i'RiVEDI v. STATE lMAOON, J) 537 A

"'Mineral Extraction Rules, 1955, provided for the lessee of a quarry lease to pay royalty at the rates specified in Schedule I to the said Rules, such rates being liable to be .revised once in every five years, as also surface rent and yearly dead rent and also provided that the lessee shall be liable to pay B the dead rent or royalty in respect of each minor mineral, whichever be higher in amount, but not both. Section 7 of the . 1948 Act conferred upon the Central Government the power to -"» make rules for the purpose of modifying or altering the terms and conditions of any mining lease granted prior to the commencement of the 1948 Act so as ~o bring it into conformity with the rules made under sections 5 and 6. In pursuance of c this power, the Central Government made the Mining Lease {Modification of Terms) Rules, 1956, by Notification No. S.R.O. 2062 dated September 4, 1956, published in the Gazette of India, dated September 15, 1956, Part II, section 3, at pages 1548-54. Rule 2 of the said Rules defined certain terms. , As originally made Rule 2 contained clause {g) which provided D ~that "'Royalty' includes 'Dead Rent'". Sub-rules (7), (8) and (9) of Rule 6 of the said Rules provided for modification iri such leases of the rate of royalty which by reason of the definition given in clause (g) of Rule 2 included the rate of dead rent. After the coming into force of the 1957 Act on June 1, 1958, clause (g) of Rule 2 and sub-rules (7), (8) and (9) E ·of Rule 6 were omitted from the said -Rules in view of the provisions with respect to such leases contained in the -1957 Act.

~ So far as the 1957 Act is concerned, under clause (i) of - i section 13(2) the rules to be made by the Central Government F ,can provide "for the fixing and the collection of dead rent, fines, fees or other charges and the collection of royalties". Although clause (i) of section 13(2) speaks of fixing and collec"tion in the case of dead rent and only collection in the case of royalties, the reason is· not that the power to fix royalties was not thought to be comprehended in the general rule-making power of the Central Government under section ,.J3(1). The reason was that a separate provision in that behalf was made by section 9 with respect to mining leases granted both before the commencement of the 1957 Act as also after the commencement of the 1957 Act. Another reason for doing so was to specify the rates for royalties in respect of different minerals other than minor minerals in the Second Schedule to

538 SUPREME COURT REPORTS [1986) 1 S.C.R.

A the 1957 Act in order to restrict the scope of subordinate 7 legislation as pointed out in the Statement of Objects and Reasons to the Legislative Bill No. 83 of 1972. As seen earlier, Rule 27 of the Mineral Concession Rules, 1960, provi- des that every mining lease is to contain a provision requir- ing the lessee to pay surf ace rent and dead rent and a further B provision that the lessee shall be liable to pay dead rent or royalty in respect of each mineral, whichever be higher in amount, but not both. It is pertinent to note that these pro-~ visions were included in the said Rules when they were first made and thus existed in. the said Rules DlllCh prior to the ll insertion of section 9A in the 1957 Act by the Amendment Act c of 1972, casting a liability upon the lessee to pay dead rent.

The Gujarat High Court in Smt. Sonbai' e Case held that the intention of Parliament in enacting section 15(1) was not to clothe the State Governments with power to impose any financial liability upon the lessee but only to give them the Y D power to prescribe conditions for regulating the grant of • leases other than conditions relating to financial liability and that the power to prescribe conditions relating to financial liability of a lessee were to be found only in sub-section (3) of section 15. In order to ascertain this intention attributed by it to Parliament, the Gujarat High E Court relied upon the provisions of section 9A and sub-section (3) of section 15. The same view was taken by the Andhra Pradesh High Court in M.V. Subba Rao v. State of Andhra II Pradesh and another, A.IR. 1978 A.P. 453. ~ We find that the reliance placed by the Gujarat High I · F Court in Smt. Sonbai'e Case, which is one of the two judgments of that High Court challenged before us, and the Andhra Pradesh High Court in M.V. Subba Rao'e Case on sub-section (3) of section 15 and section 9A in order.to ascertain the inten- tion of Parliament is misplaced. Though sub-section (3) was inserted in section 15 with retrospective effect by the Amend- G ment Act of 1972, until it was so inserted it was not before the courts when they came to construe the scope of the .. rule-making power of the State Governments under section 15(1) and even without sub-section (3) being before the courts, various High Courts have held that the State Governments' power to charge royalty is to be found in the rule-making H power conferred by section 15(1). The Patna High Court in

D.K. TRIVEDI v. STATE [MADON, J] 539

A 1cLaddu Mal and Ors. v. The State of Bihar and Ors., A.l.R, 1965 Patna 491, the Madhya Pradesh High Court in Banku Bihari. Saba v. State Government of Madhya Pradesh and Ors., A. l.R, 1969 M.P. 210, the Punjab and Haryana High Court in Dr. Shanti Saroop Sharma and Anr. v. State of Punjab and Ors., A.l.R. B 1969 Punj. & Har. 79 and M/s. Amar Singh Kodi Lal v. State of Haryana and Ors., A.l.R. 1972 Punj. & Har. 356 and the Rajasthan High Court in M/s. Brf.mco Bricks, Bbaratpur v. State ,,of Rajastban and Anr., A.l.R. 1972 Raj. 145 have all taken ' this view. These were all cases prior to the Amendment Act of 1972 when sub-section (3) of section 15 was not then on the statute book. After the enactmer.t of the Amendment Act of c 1972, the Allahabad High Court in Sbeo Varm Singh v. State of U.P., A.l.R. 1980 All 92 has held that the power of the State Governments to Charge royalty and dead rent is to be found only in section 15(1). The Rajasthan High Court in Bal KliaJnd Arora etc. v. State of Rajastban and Ors., A. l.R. 1981 Raj, _95 has also taken the same view disagreeing with the view taken D ',by the Andhra Pradesh High Court in M.V. Subba Jlao's Case. 4 . A proper reading of sub-section (3) of section 15 shows that it does not confer any power upon the State Governments to make rules with respect to royalty. Royalty is payable by the holder -0f a quarry lease or mining lease or other mineral E' concession granted under rules made Under sub-section (1) of section 15. What sub-section (3) does is to make such holder liable to pay royalty in respect of minor minerals removed or consumed not only by him but also by his agent, manager, ,employee, contractor or sub-lessee. It thus casts a vicarious 4J:liability upon such holder to pay royalty in respect of the acts of persons other than himself. The very fact that under sub-section (3) the liability of such holder is to pay royalty "at the rate prescribed for· the time being in the ~~s framed by the State Government in respect of minor minerals" shows that the prescribing of the rate of royalty in respect of minor minerals is to be done under the rule-making power of the State Governments which is to be found in sub-section (1) of section 15. Yet another purpose of enacting sub-section (3) ""is to be found in the proviso to that sub-section which pro- hibits the State Government from enhancing the rate of royalty in respect of any minor mineral for more than once during any period of four years. If the reliance placed by the Gujarat H and the Andhra Pradesh High Courts on sub-section (3) of

540 SUPREME COURT REPOR1'S [19861 1 s.c.R. A section 15 in order to ascertain the 'intention of Parliament .,, was misplaced, their reliance upon section 9A was even more misplaced. Section 9A was inserted in the 1957 Act by the Amendment Act of 1972 but it was not inserted with retrospec- tive effect. It was, therefore, not there when section 15(1) .Ii was placed upon the statute book while enacting the 1957 Act. ~ B Section 9A was enacted with a two-fold purpose. It cast a liability upon the holder of a mining lease whether granted before or after the commencement of the 1972 Act, that is, ··fr either before or after September 12, 1972, to pay to the State Government dead rent at the rates specified for the time being in the Third Schedule to the 1957 Act "notwithstanding any- c thing contained in the instrument of lease or in any other law for the time being in force." The purpose of inserting section 9A in the 1957 Act, as stated in the Statement of Objects and Reasons to Legislative Bill No. 83 of 1972, was to make a "pr,ovision of a statutory basis for calculation of dead rent". Section 9A also provides that the liability of the lessee D would be to pay either royalty or dead rent whichever is / greater, thus embodying in the Act what was contained in the proviso to clause (c) of Rule 27 of the Minor Mineral Conces- sion Rules, 1960. Section 9A was inserted also with a view to prohibit the Central Government from enhancing 'the rate of dead rent more than once during any period of four years. It E is pertinent to note that by the Amendment Act of 1972 section 9 was also amended. While under the original sub-section ( l) of section 9 the liability of the holder of a mining lease was only to pay royalty in respect of any mineral removed by him, after the amendment he is made liable to pay royalty in respect of any mineral "removed or consumed by him or by his ~ F agent, manage.r, employee, contractor of sub-lessee". By the Amend~nti ;~ 0£ f 972 the power of the Central Government to amend 'by \ r cation the Second Schedule which specifies the rate or ray . y ,was also curtailed by inserting a proviso to section 9(3) ::'fn'-order to provide that the Central Government shall not enhance the rate of royalty in respect of any G mineral more than once during any period of four years. The amendments made by the Amendment Act of 1972 have, therefore, no relevance for ascertaining the scope of the rule-m.aldng·~ power of the State Governments under section 15(1),

We therefore, hold that the view taken by the Gujarat H High Court in Smt. Sonbai 's Case and by the Andhra Pradesh

D.K. TRIVEDI v. STATE [MADON, J] 541

'11igh Court in M.V. Subtia Rao's Case was wrong and requires to be overruled.

The next contention was that though under section 15(1) the State Governments may have the power to make rules B providing for payment of royalty and dead rent, sub-section (3) showed that such power did not extend to amending the rules so as to enhance the rate of dead rent. The submission - i n this behalf was that the power to enhance the rate of royalty by amending the rules was expressly provided for in sub-section (3) by the use of the words "at the rate prescribed for the time being in the rules framed by the State c Government in respect of minor minerals" but there was no such provision in section 15 with respect to dead rent. We are unable to accept this submission. Rules under section 15(1), though made by the State Governments, are rules made under a Central Act and the provisions of the General Clauses Act, >' 1897, apply to such rules. Under section 21 of the General D ''Clauaes Act, where by any Central Act, a power to make rules is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions if any, to add to, amend, vary or rescind any rules so made. The power to amend the rules is, therefore, com- prehended within the power to make rules and as section 15(1) E confers upon the State Governments the power to make rules providing for payment of dead rent and royalty, it also confers upon the State Governments the power to amend those rules so as to alter the rates of royalty and dead rent so ""rescribed, either by enhancing or reducing such rates. The - ~ource of the power to enhance the rate of royalty is not contained in sub-section (3) of section 15 as submitted at the Bar. As pointed out earlier, the purpose of inserting the said sub-section in section 15 with retrospective effect was an entirely different one.

It was then contended that the very language of sub-section (1) of section 15 shows that it does not confer -;any power upon the State Governments to enhance the rate of royalty or dead rent because the rules which are to be made under that sub-section are for regulating the grant of quarry ieases, mining leases and other mineral concessions in respect of minor minerals and, therefore, the rules under that sub-section can be made only with respect to the time when

542 SUPREME COURT REPORTS [1986] 1 S.C.R.

A such leases or concessions are granted -and not with respect to_, ~ any point of time subsequent thereto and there being no provision similar to sub-section (3) of section 15 with respect to dead rent, any rule providing for increase in the rate of dead· rent during the subsistence of a lease would be ultra vires section 15, This subml.ssion is devoid of B substance. As pointed out earlier, sub-section (3) of section 15 does not confer any power to amend the rules made under section 15(1), for the power to amend the rules is comprehen- , . _ ded within the power to make the rules conferred by sub-section (1) of section 15, The construction sought to be placed upon the word "grant" in section 15(1) also cannot be c accepted. While granting a lease it is open to the granter to prescribe conditions which aro. to be observed during the period of the grant and also to provide for the forefeiture of the lease on breach of any of those conditions. If the grant of a lease were not to prescribe such conditions, the lessee could with impunity commit breaches of the conditions of the D lease. Ordinary leases of immovable property at times provide•1 for periodic increases of rent and there is no reason why such increases should not be made in a mining or quarry lease or other mineral concession granted under a regulatory statute intended for the benefit of the public and even less reason why such a statute should not confer power to make rules pro- viding for increases in the rate of dead rent during the sub- sistence of the lease. In any event, the power to make rules under section· 15(1) is also for purposes connected with the grant of mining and quarry leases and other mineral conces- sions and the expression "and for purposes connected there-~ with" read with the word "grant" would include the power to \ ~ F enhance the rate of dead rent during the subsistence of the lease.

In support of the above contention it was also submitted that in the absence of a provision like the one contained in section 15(3) the power to enhance the rate of dead rent cannot be so exercised as to affect subsisting leases and that unless •this construction were placed upon sub-section (1), the,-•/ ' power conferred by that sub-section wculd be bad in law as being an arbitrary power. lt was submitted that a mining lease is the result of a contract entered into between two pa~·:ies and dead rent is part of the consideretbn for the grant of the lease, and just as in the case of a contract of sale of

D.K, TRIVEDI v. STATE [MAlXlN, J] 543 A 'l!oods, it cannot be left to the sweet will of the seller to charge what price he liked, in the same way in the case of leases and concessions granted under section 15(1), it cannot be left to the State Governments to amend the rules so as to charge whatever dead rent they like and whenever they like B during the subsistence of the lease. We find no substance in either of these submissions. A quarry lease, mining lease or other mineral concession in respect of a minor mineral does -not stand on the same footing as an ordinary contract. These leases and concessions are granted by the State Governments pursuant to rules made under the ·Statutory power conferred upon them by a regulatory Act. Minerals are part of the material resources which constitute a nation's natural wealth c and if the nation is to advance industrially and if its economy is to be benefitted by the proper development and exploitation of these resources, they cannot be permitted to be frittered tJMay and exhausted within a few years by , indiscriminate exploitation without any regard to public and D .f!.ational interest. The same view was expressed by the Court in State of Tamil Madu v. Bind Stone Etc., (1981] 2.S.C.R. 742,

751. It was for achieving the object set out above that both the 1948 Act and the 1957 Act were enacted. The long title of the 1957 Act is "An Act to provide for the regulation of mines and the development of minerals under the control of the E Union." The 1948 Act contained a preamble which stated "WHEREAS it is expedient in the public interest to provide for the regulation of mines and minerals and for the development of minerals to the extent hereinafter specified". The makers :j?f the Constitution recognized the importance to the nation of ~ the regulation of mines and mineral development and, F therefore, enacted Entry 54 of the Union List and Entry 23 of the State List. In the exercise of the power conferred by Entry 54, Parliament has made a declaration in section 2 ·of the 1957 Act that "it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent herein- G after provided". The presumption is that an authority clothed ~-ith a statutory power will exercise such power reasonably, and if in the public interest and for the efficacious regula- tion of mines and quarries of minor minerals and the proper development of such minerals, a State Government as the dele- gate of the Union Government thinks fit to amend the rules so H as to enhance the rate of dead rent, it cannot be said that it

544 SUPREME COURT REPORTS (1986] t s.c.R. A is preven'ted from doing so by the principles of the ordinary-I law of contracts. It may be that in certain cases by enhancing the rate of dead rent the holders of leases in respect of certain types of minor minerals may be adversely affected but private interest cannot be permitted to override public inter- est. Conservation of minerals and their proper exploitation B result in securing the maximum benefit to the community and it is open to the State Governments to enhance the rate of dead rent so as to ensure the proper conservation and development - of minor minerals even though it may affect a lessee's liabi- lity under a subsisting lease. c Where a statute confers discretionary powers upon the executive or an administrative authority, the validity or constitutionality of such power cannot be judged on the assumption that the executive or such authority will act in an arbitrary manner in the exercise of the discretion conferred upon it. If the executive or the administrative authority acts D in an arbitrary manner, its action would be bad in law and ,1 liable to be struck down by the courts but the possibility of abuse of power or arbitrary exercise of power cannot invalidate the statute conferring the power or the power which has been conferred by it. E The next submission was that the rates of royalty and dead rent cannot be enhanced unilaterally without giving an opportunity of being heard to the lessees who would be adversely affected thereby. This submission found favour with the Gujarat High Court in Smt. sonbai's Case. It was sought to~ be supported by a reference to section 9(3), 9A(2) and 28. I~ F Under section 9(3) the Central Government can, by notification ' published in the Official Gazette, amend the second Schedule to the 1957 Act so as to enhance or reduce the rate at which royalty is payable and similarly under section 9A(2) the Central Government can, by notification published in the Official Gazette, amend the Third Schedule to the 1957 Act so as to enhance or reduce the rate at which dead rent is payable. Under section 28, every rule and notification made by.,_ the Central Government is to be laid before Parliament and if not approved, it is to be of no effect. There is no such provision with respect to a rule or notification amending a rule made by a State Government. It was, therefore, submitted that in the absence of any provision for legislative approval

D.K. TRIVEDI v. STATE [MADON, J] 545

~with respect to the rules made by the State Governments or a notification amending such rules, it is all the more necessary that an opportunity should be given to the concerned lessees to raise their objections to any proposed enhancement. The argument that the lessees who would be affected by an enhancement in the rate of royalty or dead rent should be heard before making such enhancement is based upon a total misunderstanding of the rule-making process and the power to . . . make rules. The enhancement in the rates of royalty and dead rent is made in the exercise of the power to amend the rules framed under secton 15(1). It is thus made in the exercise of. statutory power. There is no such principle of law that before such a statutory power is exerdsed, persons who may be affected thereby should be heard. Whether any opportunity is to be given to persons affected to make representations to the Government would depend upon the form in which the rule-making power is conferred. It is for the legislative body which , confers the rule-making power ~o decide in what form such D :, power should be conferred. In some Acts it is provided that the draft of the rules proposed to be made as also any proposed amendment thereto should be published in the Official Gazette so that members of the public may have an opportunity of making such representations or raising such objections as they think fit. Some other Acts provide for rules to be laid E before Parliament or the Legislature for its approval and to be effective only after such approval is given or to continue in force with such modifications as Parliament or the Legislature may make, and if the approval is not given to 1cease to have any effect. It was, therefore, for Parliament to ·~ ldecide whether rules and notifications made by the State F Governments under section 15(1) should be laid before Parliament or the Legislature of the State or not. It, however, thought it fit to do so with respect to minerals other than minor minerals since these minerals are of vital importance to the country's industry and economy, but did not think it fit to do so in the case of minor minerals because, it did not consider them to be of equal importance. An amendment .,_of the rules made under section 15(1), even though it may have the effect of enhancing the rates of royalty or dead rent does not, therefore, become bad in law because no opportunity of being heard or making a representation is given to persons who would be prejudicially affected thereby. Section 15(1) does not contain any provision for giving any such opportunity and no such provision can be imported into that sub-.section.